CGT liability: I have recently received the proceeds of my shares in First Active plc from Ulster Rank (Royal Bank of Scotland). I will have a capital gains tax (CGT) liability which I am able to calculate myself thanks to your earlier column.

I invested in Eircom in July 1999. I never claimed a CGT loss since I thought you could only set it off against a gain in the same tax year. I have been told that it is possible to carry forward CGT tax losses. Is this correct?

Is it possible to claim this CGT loss of year 1999/2000 in the year 2004 to carry forward for setting off against the First Active CGT gain? If so, could you please help me? These are my Eircom statistics. I bought 3,338 shares at the offer price of 3.90 in July 1999 at a cost of 13,018.20. A year later, I received 133 bonus shares at no cost.

In May 2001, I received 1,644 Vodafone shares following the spin-off of Eircom's mobile operations at a rate of 0.9478 of a Vodafone share for every two Eircom shares held.

In November 2001, I received 4,633.78 as a result of Valentia's cash offer of 1.335 for each of my 3,471 Eircom shares.

I am trying to calculate my loss on the Valentia cash bid. What is the notional cost that I can set off against? What is the base notional cost of the Vodafone shares?

Mr C.P., Dublin

Before I get into the nitty gritty of the Eircom capital loss, you raise a point that is frequently misunderstood, especially by inexperienced investors of the sort that lost out so badly in the Eircom fiasco. When you secure a capital gain, you are obliged to pay tax on it in the tax year it falls due. However, when you ship a loss on an investment - and it could be a painting as easily as a share - you offset this against any capital gain before assessing a liability for CGT.

If you do not have any gain to offset the loss against in the year it occurs, then you carry that loss forward until a gain arises that it can be fully offset against. Equally, if you can only partly offset the loss against a gain in that year or any subsequent year, the loss still remains live until it is fully offset. At it simplest, a gain requires action in the year it occurs but a loss can theoretically live forever.

That brings us to the convoluted break-up of the original Eircom. The Revenue Commissioners have set down the precise metrics on how the base cost is spilt between the former Eircell and the rump of Eircom that became the subject of the cash offer. It determined that 43 per cent of the original Eircom share price of €3.90 was accounted for by the part of the company acquired by Valentia and 57 per cent for the part that went to Vodafone.

These percentages are what the Revenue has determined should be used in apportioning the base cost of shares in Eircom bought after flotation and prior to the break-up of the group, regardless of price.

The Revenue has determined that the market value of the mobile and non-mobile sides of Eircom following the split was €1.45406 and €1.11 respectively. Working back from this, it sets down that, of the original €3.90 offer price for the shares, €1.69 is accounted for by the part of the company bought by Valentia.

For what it is worth, the deemed purchase price on each Vodafone share you hold following the deal - for every two Eircom shares, you got 0.9478 of a Vodafone share, as you note - is €4.66.

Naturally, the base price of your bonus shares is nil as you paid nothing for them.

Where does that leave you now? Basically, you were paid €1.335 by Valentia for the part of the company that the revenue says cost you €1.69. That gives you a loss of 35.5 cents for each of the original shares. Given you bought 3,338 shares, that amounts to a loss of €1,184.99.

You need to offset that against the €1.335 you were paid for each of your 133 bonus shares. That is all considered a gain and amounts to €177.56.

Even allowing for that, you have recorded a capital loss of €1,007.43 on the transaction and that is still available for you to offset against your gains on the First Active deal.

I leave the Vodafone shares out of this because you are, I gather, holding them in the hope of recovering that portion of your money. If you were to sell these now, it would also be at a loss to your original investment.

Depending on your gain from the First Active deal, it might be worth considering whether, for tax purposes, to crystallise that loss now or hold on.

Vodafone

Having sold my Vodafone shares acquired under the Eircom break-up, I plan to offset the loss on them against a profit on another share deal. Could you tell me what is the acquisition price of the Vodafone shares that the Revenue Commissioners will accept?

M.M., Kildare

The Revenue has determined, as laid out above, that the "purchase price" of each of your bought Vodafone shares is €4.66. You will need to translate the sale price of the stock into euro and work out the difference in determining your capital loss. This can then be set against the gain you have made of the other shares. One thing to bear in mind is that the Vodafone shares secured with any bonus shares you might have received in the Eircom investment will be treated as having a purchase price of nil for capital gains tax purposes. The key to working it out is to remember that every two Eircom shares gave you 0.9478 of a Vodafone share. Fractions were discounted and paid back in cash and these can be discounted back to the bonus shares.

With-profit bond

My husband and I were misled by advice of National Irish Bank into thinking that we had a five-year investment with GCU (now Hibernian). We realise we did not read the small print and market value adjusters (MVAs) were never mentioned. Until banks stop paying big commission to sales staff, no doubt others will fall into the same trap.

Ms K.M., email

The reputation of the financial services industry is relation to sales tactics is not one to be proud of. Having said that, as with most things, it is a case of buyer beware.

Reading small print can be hassle. You often have someone hovering looking for your signature and it can often be in jargon.

However, if there is a shock in store, it will normally be in the small print and it rewards close attention.

Don't be rushed. If necessary, take the full document away with you. It is little consolation to you now that you are constrained by the market value adjusters in relation to this product but it might provide a salutary lesson for others.

As for sales people, the key point to remember is that there is no such thing as free advice. Intermediaries have to be paid. If customers are not doing it up front, then it is going to come from commission. While most brokers are well informed and fair, there will always be a few who succumb to pitching the product that best serves them.

If you genuinely feel this product was mis-sold, it would do you no harm to complain to the seller and to the Irish Financial Services Regulatory Authority (IFSRA). Not reading the small print won't help your case but a sales representative has an obligation to explain products fully.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or email dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.